FCC fines Comcast $2.3M for 'cramming' customers with services they never ordered

Comcast will pay a $2.3 million fine to the federal government to settle charges that it sold cable channels and equipment to customers who had never ordered the services.

The practice is known as "negative option billing" or "cramming."

The Federal Communications Commission on Tuesday called it the biggest civil fine ever levied against a cable operator and said that Comcast has agreed to "implement a five-year compliance plan" to tighten billing oversight.

But the fine pales in comparison with the $100 million penalty that FCC imposed on AT&T Inc.'s wireless business in June 2015 over its failure to disclose to consumers sufficient information on its data plans.

The FCC investigation, sparked by Comcast complaints filed with the agency in 2014 and 2015, concluded that the cable giant refunded customers for unauthorized charges but only after pained exertions by those who brought the bogus charges to Comcast's attention.

One Florida woman complained to the FCC that she was charged for an Xfinity Latino triple play bundle with international calling that she had not ordered. A Colorado man complained that Comcast charged him for an extra cable box for more than two years. And a Washington, D.C., resident said Comcast charged him for Showtime for more than a year even though he hadn't ordered it and couldn't access it.

Comcast spokeswoman Sena Fitzmaurice said that in the past Comcast's "customer service should have been better and our bills clearer and ... customers at times have been unncessarily frustrated or confused."

Fitzmaurice also noted that after two years of investigation, the FCC found "no intentional wrongdoing but just isolated errors or customer confusion."

Over the last 18 months, Comcast has been overhauling its customer service operations  by hiring an additional 5,000 call center representatives and technicians, and taking other actions. The FCC fine signals the reputational challenge that Comcast faces for years of angry customers and shoddy service.

The FCC and Comcast settled the investigation with a consent decree in which the parties disagreed on the legal definition of "negative option billing." The FCC defined the practice broadly, while Comcast said the practice should be viewed narrowly. The company's actions were not deliberately deceptive, according to its position in the decree.

Critics cheered the FCC's action.

"It's important for the FCC to hold Comcast accountable for its lack of transparency in its business practices toward customers," said Hannah Sassaman, policy director for the nonprofit activist group Media Mobilizing Project in Philadelphia. "I have personally met hundreds of consumers who caught extra fees on their bills and had to fight for hours to get their hard-earned money back."

Travis LeBlanc, the FCC's chief of the enforcement bureau, said in a statement that "a cable bill should include charges only for services and euipment ordered by the customer, nothing more and nothing less. We expect all cable and phone companies to take responsibility for the accuracy of their bills and to ensure that their customers have authorized any charges."

Comcast customers will not benefit from the $2.3 million fine. The money will go to the federal government.